Prior to last night’s Republican debate in Boulder, Colorado, I challenged John Kasich and Jeb Bush to have the courage of their “convictions” and to call out the other candidates for their constant dependency on bullshit and fantasy. When the debate began, it seemed as though Kasich, at least, had read my advice because he came out guns blazing, talking about how the party was on the verge of nominating someone who is manifestly incapable of doing the job. And his argument was well-presented and reality-based.
KASICH: To talk [as Ben Carson does] about we’re just gonna have a 10 percent tithe and that’s how we’re gonna fund the government? And we’re going to just fix everything with waste, fraud, and abuse? Or that we’re just going to be great? Or we’re going to ship 10 million Americans—or 10 million people out of this country, leaving their children here in this country and dividing families?
Folks, we’ve got to wake up. We cannot elect somebody that doesn’t know how to do the job. You have got to pick somebody who has experience, somebody that has the know-how, the discipline.
Of course, Trump immediately responded with a sharp reminder that Kasich worked for Lehman Brothers at the time that that firm’s collapse nearly brought us a second Great Depression. It’s doubtful that Kasich got the better of the exchange, but I do think that Kasich was speaking for a lot of people and I guess that his message probably resonated with much of the Establishment. In any case, someone needed to say it.
But, there’s a bigger problem than the one that Kasich outlines. And that problem is that even Kasich is out of his fucking mind and/or completely willing to spew the rankest bullshit and the most irredeemable fantasy.
In the following excerpt, Kasich is talking about the deal that was just struck in Congress to avoid defaulting on our debts or shutting down the government. He begins sensibly, talking about how the deal adds to our debt and that he had been part of the team that balanced the federal budget in the 1990’s. But he finishes with a real clunker.
KASICH: I want to go back to what we were talking about earlier, this budget deal in Washington.
This is the same old stuff since I left.
You spend the money today and then you hope you’re going to save money tomorrow.
I don’t know if people understand, but I spent a lifetime with my colleagues getting us to a federal balanced budget. We actually did it. And I have a road map and a plan right now to get us to balance.
Reforming entitlements, cutting taxes. You see, because if you really want to get to a balanced budget, you need to reduce your expenses and you need to grow your economy. So what I will tell you about our incentives — our incentives are tight, and at the end of the day we make sure that we gain more from the creation of jobs than what we lose.
And you know what? Ohio, one of the best growing places in the country — I not only did it in Washington, I did it in Ohio, and I’ll go back to Washington, and there will be no more silly deals…
HARWOOD: Thank you, Governor.
KASICH: … If I become President because we’ll have a Constitutional Amendment to require a federally balanced budget so they will do their job.
HARWOOD: Thank you, Governor. Thank you.
I’ve said this many times before, but a constitutional amendment to compel Congress to pass a balanced budget is the stupidest goddamned idea in existence. I’m not going to go into great detail to explain why, but I’ll ask you to consider just two things. First, when the private economy contracts the best and pretty much only thing the federal government can do to slow or reverse a recession is to make up a lot of the difference by massively increasing spending. This “stimulus” spending can be combined with efforts to increase the availability and decrease the cost of money. In other words, you issue a lot of federal contracts and grants, you print money (issue new federal debt), and you lower interest rates to encourage economic risk-taking.
Second, since our country can print its own money, we have a fiat currency, which means that the value of U.S. Dollars isn’t tied to the value of some commodity or precious metal. As a result, we are able to use our federal debt in the form of U.S. Treasury bonds to maintain and facilitate the global economic system. The whole global economy would go haywire if the U.S. stopped issuing Treasury bonds because it didn’t owe anybody any money.
You don’t have to fully understand how the issuance of bonds fuels economic activity to grasp that the global system is premised on the U.S. loaning money to people in perpetuity. We can certainly lower our debt by running surpluses for a period of time, but it simply isn’t desirable for us to have no debt at all.
So, a balanced budget amendment would take away all of Congress’s tools for combatting massive cyclical job loss while also impacting the Treasury Department and Federal Reserve’s ability to meaningfully act. Routine recessions could easily turn into global recessions, and for no good reason. And I say “no good reason” because it simply isn’t part of the design of the global economy that the U.S. will stop issuing debt and begin investing surplus money in some portfolio of stocks and mutual funds.
This is not to say that it’s desirable to run massive deficits, the financing of which will chew up a huge percentage of the budget. Paying interest on debt chips away at the money that is available for more productive purposes. But there’s a big difference between keeping your deficit spending low and passing a constitutional amendment that dictates that the government cannot spend more than it takes in. That would make sense in a country that can’t print its own money or one that doesn’t issue the primary global currency.
I can’t really think of a more destructive idea than a balanced budget amendment. If we had had one in 2008-9, we never could have pulled out of the Great Recession.
So, while Kasich certainly sounds reasonable when compared to his colleagues, his willingness to pander on this issue is at least as bad as the idiotic, unworkable tax plans of Rubio and Trump and Jeb that will never, ever, become law for the simple reason that they would explode the very deficit they claim to care about.
Bush and Cheney got away with telling their base that deficits don’t matter, but just ask John Boehner and Eric Cantor how that worked out in the end. Sadly, there is no one running for the Republican nomination who is willing to tell the truth about how little deficits matter or to propose tax plans premised on the idea that they do.
